Bonds are given ratings by several independent rating agencies to indicate their credit quality. A higher rated bond is seen as safer and its yield will usually decrease as its rating increases. A BAA rated bond is seen as adequately safe but changing economic conditions could cause the obligor to default on its financial commitments. Read more about bond ratings here and here.
What does this change mean?
This change means our AI platform is telling us that the US BAA Bond factor is now supporting a more bearish outlook on world equity. As such, any asset classes in our portfolios that contain world equity will potentially go underweight (i.e. decrease portfolio’s %) over the coming months.
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DISCLAIMER: The Responsive.AI Update does not constitute investment advice and is for information purposes only. Responsive Capital Management bares no liability for the usage of this data and the data is provided as is.
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